In June 2015, the Indian food regulatory body, the Food Safety and Standards Authority of India, declared Nestlé’s brand of noodles, Maggi, unsafe for human consumption. Tested samples showed excess levels of lead and added monosodium glutamate. To retain the trust of consumers, Nestlé recalled Maggi from all store shelves in the country. Management was then grappling with an improved re-positioning strategy to help Nestlé retain its considerable market share in India. The other issue that Nestlé needed to resolve was what role pricing would play in influencing consumer purchase decisions during the proposed product relaunch.

Learning Objective:

This case is designed for graduate and undergraduate management courses, especially in relation to the concepts of pricing, product management, and brand management, as well as in discussions of segmentation, targeting, and positioning. The case is also suitable for course packs in marketing management, pricing, and strategic marketing. After completion of this case, students should be able to

understand the role of pricing in the relaunch of a product;

understand the strategic pricing pyramid to set pricing for a product;

understand prospect theory in terms of pricing;

understand how prospect theory influences buyer perception;

draft a new value communication strategy for a product; and

discuss the importance of educating the target customer through the media and how to lobby lawmakers and regulatory authorities